Unions: Reforms are a freshman folly

From the moment last fall when the General Assembly created a commission to stanch Connecticut’s fiscal meltdown and economic malaise, we all knew producing a set of recommendations would be hard enough — and producing meaningful change in an election year almost impossible.

Now we’re seeing that reality play out, with Friday’s grand public hearing at the Capitol involving so many lawmakers there was no meeting room to fit them all.

Business groups don’t like the sweeping reform plan’s payroll tax of 0.8 percent, small businesses don’t like the expanded sales tax, restaurants and growers don’t like the $15-an-hour minimum wage, motorists don’t like the gas tax hike, commuters and truckers abhor the highway tolls and clients of state services worry about the $1 billion spending cut.

Cities and towns are happy for now, until some of that $1 billion in cuts comes out of their hides.

Oh, did I mention organized labor? Connecticut’s public employee unions have mounted an attack on the Commission on Fiscal Sustainability and Economic Growth. And they’re doing it not, for the most part, based on fairness to workers, but rather on grounds that many of the pitched changes make no economic sense.

Led by state AFL-CIO President Lori Pelletier and Sal Luciano, head of AFSCME Council 4, among others, union leaders and members are speaking with what they call a scientific voice against a $2.1 billion cut in the state income tax, reforms in teacher pensions, cuts in agency spending, a tightening of collective bargaining rules and a remake in the way the state sets benefits for its employees.

“A good, stable, longservice workforce is an asset to be proud of and support, not a burden or a punching bag,” said a 14-page response by Pelletier; Luciano; Jan Hochadel, of AFT Connecticut; Thomas Bontly, of UConnAAUP; and Dan Livingston, chief negotiator for the state employees bargaining coalition.

That gets to the heart of the matter in politics and economics. In the former, the union leaders are dead right that they’re viewed by many in the public, and some elected officials, as the enemy of fiscal responsibility because of bloated pensions, benefits and overtime policies.

The unions aren’t the problem. The problem is old, legacy benefit packages that weren’t funded and were not created by the collective bargaining system we have now.

But they go too far. They belittle the commission, which is dominated by business executives, as a bunch of neophytes when it comes to public policy. The title: “A Freshman’s First Report — Arrogance and Lack of Courage Lead to a Missed Opportunity for Reform.”

They ask: We wouldn’t let a newly enlightened college student run the world after one semester, so why give so much power to the commission?

That’s a bit harsh considering the co-chairmen — Jim Smith, recently retired as the longtime CEO of the parent of Webster Bank, and Robert Patricelli, a recently retired health care executive — have been around public policy literally their entire lives. Patricelli started his career in the White House and both learned from fathers who ran local companies — in Smith’s case, as founder of the same bank.

Besides, the commission’s sweeping recommendations include measures the unions might like: The $15 an hour minimum wage by 2022 (they want it now, but still); a cut in the state income tax for working families; taxes and fees to pay for transportation; and the business payroll tax, although they call it too small, “enacted on a community that just saw its federal tax rates reduced from 35 percent to 21 percent.”

The commission even suggested that health and retirement benefits for state employees hired after last summer might be too low to attract the right people.

Politics and putdowns aside, the economic question — what’s going to work best? — matters most. The unions argue — in their own report and a union-backed study released Thursday by the Washington, D.C.-based Economic Policy Institute — that pro-labor policies help the whole state’s economy.

The richest and most successful states, they argue, including New York, California and Massachusetts, are typically those that have strong collective bargaining traditions.

For example, the idea of allowing arbitrators to choose compromise pay and benefits awards, advanced by the commission, encourages labor and management to hold extreme positions.

The unions say Connecticut’s lack of growth comes despite a 20 percent gain in income since

“With agency staffing levels down approximately 20 percent, we truly do not have the resources to dedicate to any studies.”

Catherine Smith, commissioner of the state Department of Economic Development

2007, and we’re not properly taxing that income. They show research claiming it’s a myth that rich families leave because of high taxes.

If we needed more tension, Thursday’s Commerce Department report showing Connecticut gained income in 2017 at half the rate of the nation did the trick. What’s the problem? “This courageous commission failed to use the words ‘race’ or ‘class’ once in their 119page report,” the unions said.

Rep. Themis Klarides, R-Derby, the House Republican leader, said she has an open mind about the economic plan and isn’t bashing unions, but the state must have more flexible collective bargaining rules.

“It’s not sustainable right now,” she said, adding the unions now criticize the sales tax hike, but didn’t do so last year when Democrats proposed it.

As Klarides says, at least we can all agree we have a fiscal crisis, with $2.5 billion shortfalls projected to return again in just two years. The unions have given six years of pay freezes out of 11 and they do need to give more, but so does everyone.

The holdup: Aside from the obvious political deadlock at the Capitol, we lack deep economic analysis. Wisely, lawmakers have asked the state Department of Economic and Community Development to study these economic reforms, the Connecticut biotech industry and three other topics.

But Gov. Dannel P. Malloy has slashed spending in agencies. And in a final punctuation of paucity, Commissioner Catherine Smith is now saying no, sorry dear lawmakers.

“With agency staffing levels down approximately 20 percent, we truly do not have the resources to dedicate to any studies,” she said in written testimony for Friday’s hearing.

That’s what the unions are warning against. We’ve cut so much we can’t even afford to study whether it’s smart to cut so much.